The month of October is historically known in capital markets as the month of events and
volatility. In the month there were two major happenings, one on domestic front and the other
one on global front. On Domestic side, though RBI raised the key rates by 25 bps but indicated
that pause in interest rates is likely in Dec meet. This provided much relief to India Inc which is
struggling with higher cost of debt. On Global front, European leaders met to resolve crisis in
Europe and finally fix a deal to end the Greece crisis. It sparked a rally in European and other
global markets but rally was put to halt when Greek Prime Minister George Papandreou shocked the euro zone with his announcement that he will hold a referendum on the Greece bailout deal.Gold rose 5% in the month while dollar rise took a pause. Crude oil price increased from $81.86/barrel to $93.49/barrel.
FII bought Indian equities while DII remained net sellers.We believe that market has formed a bottom around 4750 (Nifty) levels and things will start getting better hereon. We have seen India Inc posting Q2 results as per expectation and some of the corporate posted very good numbers. Though concerns remain on European front after Greek Prime Minister’s announcement but things are likely to improve on domestic side. We hold our advice to investors to keep buying equity mutual funds through SIP/ STP route to generate wealth over the long term. On debt side we continue recommending FMPs as Bank CDs and other CPs are available at very attractive rates and locking these papers in FMPs will yield good returns.
We maintain our view to hold 10% allocation to gold in the overall portfolio.
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